At the time banks were not popular, so I had to search high and low for three banks and a “church coin purse” that looked very different. On her birthday, we explained that since she was now a big girl she would begin receiving a weekly allowance. To make the math easier on everyone, we gave her four dimes a week. Each of the banks was labeled with how the money in that bank could be spent. She had one for church, one to buy presents for family, one to save for college and one she could spend as she pleased. One dime each week was to go in to each bank.
We made her responsible for requesting her allowance every Sunday morning and remembering to bring her “church money” to church. Since birthday money was given in lieu of a present, she was allowed to choose how to divide up that money or to spend it all on herself.
Over time it has been interesting to see how she uses her money. At age eleven, she already has several jobs, from working with marketing companies to cat sitting for neighbors. She is very frugal with her spending money and very generous with her gifts and money for God. She has even put away quite a bit of money for college.
Later, we added a rule that any big present type items were only given for her birthday and Christmas. If she wanted the item before the next gift opportunity, she had to purchase the item with her own money. So far she has saved up enough to buy an iPod and a laptop computer. It is amazing how well she researches her purchases and how well she cares for the items once she owns them.
This year as part of her school curriculum we added economics lessons. She is currently using the Dave Ramsey homeschool finance curriculum and loves it. I feel confident she has a firm grasp on how to be a good steward with the money God blesses her with over the years.
If you have questioned the wisdom of giving your child an allowance, I encourage you to give the multi-bank system a try. Just remember the amount of the allowance needs to be low enough to force them to save up for the things they want. (Our daughter has gotten a slight raise over the years!) It is important for them to have to delay gratification or work jobs to earn more money to buy these items. Hard work and saving also teach your child important Biblical values.